George Novak(writing as William F. Warde)

Ten Years of the New Deal

Written: March, 1943Source:Fourth International, Vol.4 No.3, March 1943, pp.79-83.Transcription/Editing: 2005 by Daniel GaidoHTML Markup: 2005 by David WaltersPublic Domain:George Novak Internet Archive 2005; This work is completely free. In any reproduction, we ask that you cite this Internet address and the publishing information above.

The close of a decade of Democratic Party rule under Roosevelt provides an appropriate occasion to survey the evolution and results of the New Deal.

Roosevelt’s New Deal was a political product of the world crisis of 1929. By 1932 this crisis had shaken the superstructure of the mightiest capitalist state in the world. The pre-1929 appearance of impregnability of American capitalism, which had captivated the imagination of the bourgeois world, was seen to be a myth. The old social equilibrium, based upon the confirmed allegiance to monopoly capitalism of the middle classes and the support of the better-paid layers of the proletariat, was shattered. The class struggle, hitherto held back by the labor aristocracy’s share in the spoils arising from the privileged world position of American imperialism, was now unleashed.

Germination of the New Deal

In removing Hoover and electing Roosevelt to office by a tremendous majority, the American people indicated their desire for a radical change. But Roosevelt was the candidate of the Democratic Party which, despite its more liberal language, was directed by men who were devoted to the interests of the capitalist class. Roosevelt himself frankly stated many times that he “cherished our system of private property and free enterprise and was determined to preserve it as the foundation of our traditional American system.” But Roosevelt also understood—what the ultra-reactionaries did not—the necessity for making certain reforms, or the appearance of reforms, in order to revive American capitalism and restore the masses’ confidence in it. “The most serious threat to our institutions,” he pointed out in 1936, “comes from those who refuse to face the need for change. Liberalism becomes the protection for the far-sighted conservative.”

In 1932 two courses opened out before the American bourgeoisie. One was the program of naked repression which had already manifested itself in Hoover’s handling of the Bonus March in Washington and Henry Ford’s shooting of the demonstrating Ford workers in Dearborn. This was the road which could culminate only in fascist reaction, the organic political tendency of monopoly capitalism.

This course—the course of Italy in the post-war depression—was pursued in Germany, Austria and in Spain. In these countries, after prolonged and exhausting civil conflicts, the capitalist rulers emerged from their national crises by overthrowing bourgeois democracy, setting up dictatorial regimes, and refashioning society along totalitarian lines. Hitler came to power in Germany at the same time as Roosevelt in the United States, and as a result of the same world crisis of capitalism.

But the “Democratic” representatives of the plutocracy here followed a policy different from that of the most ruthless representatives of monopoly capitalism in Germany. Roosevelt took the road of reform rather than the road of fascist reaction. Despite the opposition of a significant section of Big Business to Roosevelt, the bourgeoisie of the United States was able to reconcile itself to his policy of concessions. Why?

The reason lies, not in the greater kindliness and devotion to democracy of the American plutocracy, but in their favored material circumstances. The American plutocracy was the richest, most powerful and privileged section of the world bourgeoisie. Just as many American workers were able to buy automobiles, so the rulers of America could still afford to buy their way out of the crisis by throwing certain sops to the labor and farmer aristocracy.

In addition, on the political side, the policy of concessions was cheaper than a fascist dictatorship, since the drive to institute totalitarianism involves the sharpening of the class struggle and runs the risk of provoking civil war.

Consequently the Democratic Party leaders at the beginning of the decline of monopoly capitalism in the United States were enabled to push through the policy advocated by Machiavelli during the rise of capitalism centuries ago. If the possibility exists, advised Machiavelli, it is better to temporize with, rather than violently attack, an evil that has sprung up within a state, and “becomes so great as to fill everyone with apprehension.” Roosevelt’s theatrical thunder against the “economic royalists” did not much alarm the most calculating monopolists. They recognized its political necessity. They also felt they had enough pressure at their disposal to bring the heads of any capitalist party into line, whenever they tended toward too great an independence.

The Morgans, Rockefeller and their associates had already gone through similar experiences with the reform administrations and policies of Theodore Roosevelt and Woodrow Wilson. Both of these presidents, after their first fanfare of liberalism, had been forced to knuckle down to Big Business. Roosevelt was of the same caliber.

Moreover, in 1932 fascist reaction lacked the mass base necessary to the rule of all types of government. The road of reform, on the other hand, corresponded to the desires, interests and social position of light industry, the petty bourgeoisie and those sections of the proletariat under their ideological sway.

Thus Roosevelt, as an opportunist leader of imperialist democracy, simply acted in accord with Machiavelli’s dictum that “a republic or a prince must feign to do of their own liberality that to which necessity compels them.” Assuredly Roosevelt had not before this time been distinguished by exceptional liberality in public affairs. His party platform and campaign speeches in 1932 were remarkably conservative, considering the profundity of the crisis. Nevertheless, he found it necessary to lavish talk about. a New Deal, without specifying precisely what the content and objectives of this New Deal were to be. The masses took Roosevelt’s promises at face value in their frantic desire to snatch at any straw of salvation.

If the reformist side of Roosevelt’s policies disturbed some monopolists, his solicitude for the military establishment was reassuring to them. The world crisis indicated that war would stand first on the agenda in the not distant future. American capitalism required a two-sided program to emerge from its crisis: a domestic policy of reform combined with a foreign policy of maneuvering into position for the developing world war. Roosevelt fulfilled both of these needs with his New Deal program and his Big Navy outlook. Just as Harding and Coolidge expressed in their personalities and programs the era of class equilibrium and boundless profits, just as Hoover had exemplified the heedlessness and helplessness of the big bourgeoisie in the depths of the crisis, so Roosevelt, former Assistant Secretary of the Navy, fulfilled the new demands of American capitalism by combining pseudo-liberalism with the Big Navy tradition of the American imperialist theoretician, Alfred Thayer Mahan. Outstanding historical figures invariably reflect the needs of the class, or a layer of the class, which thrusts them forward and maintains them in power.

The New Deal Blooms

When Roosevelt came to power in March 1933, certain professional reactionaries denounced him as a “Communist.” The Stalinists assailed him as a “fascist.” Roosevelt’s own partisans championed him as the savior of the “forgotten man.” Father Coughlin, clerical-fascist demagogue, who advocated New Deal panaceas over the radio, insisted it was “Roosevelt or Ruin.”

The Trotskyist, on the other hand, defined his regime as essentially a political instrument of monopoly capitalism, designed to rescue American imperialism from the worst crisis in its history, to tie the working class to the state, and prepare a new war for world domination. Let us quote from the thesis of the Third National Convention of the (Trotskyist) Communist League of America on “Position and Perspectives of American Imperialism,” published in October 1933:

“In the absence of a proletarian revolution, a breathing space for American capitalism is possible. It still has very powerful resources at its disposal. It is now attempting to consolidate its position by a process of sweeping reorganizations. “This reorganization finds its popular expression in the NRA section of the New Deal program, which is presented as a vehicle of recovery. On the one hand it aims ostensibly at the restoration and stabilization of the purchasing power of the broad masses, though distinctly on the lowest possible level, together with an upturn in commodity prices to reestablish the Profit inducement for capital investments. On the other hand—and this is far more fundamental—it aims at greater concentration of industry and centralization of capital, the strengthening of monopoly capital under governmental regulation and support, to Prepare the basis for new imperialist expansions. This will facilitate the quick transformation of industry to a war footing when deemed necessary. In a word, the reorganization of American economy aims at the restoration of capitalist profits and has nothing in common with planned economy.

“Flowing from the fundamental aim of strengthening of monopoly capitalism the NRA is designed as a means of regulating social relations, that is, class relations. Its whole pattern is interwoven with attempts to elevate the system of class collaboration to the status of a permanent institution.”
Ten years of Roosevelt’s rule have shown that this characterization came closest to reality. In the early days of his regime Roosevelt hastily propped up all the sagging pillars of American capitalism. At the expense of the middle classes and working masses he aided the plutocracy with huge loans and whipped recalcitrants into line through the intervention of the state apparatus. He mollified important sections of the middle classes and light industry by increasing the purchasing power of the masses, providing credit, farm subsidies, etc. He gave just enough alms to the unemployed and enough concessions to organized labor to allay their rebellion.

The most important concession to labor was Section 7-A of the National Industrial Recovery Act, which, in addition to putting Big Business on its feet, gave legal recognition to the workers’ right to organize into unions of their own choice and engage in collective bargaining. Section 7-A granted the workers only what they had already won through their own struggles. It was conceded in the face of the obvious fact that a great new upsurge of trade unionism was beginning on a scale far beyond the capacity of either the industrialists or their government to stem.

Thus Roosevelt’s various reform measures and administrative agencies soldered around a new governmental center the social forces which had been sundered during the previous four years. Through the NRA codes even the most short-sighted and ignorant monopolists were forced to help the bourgeoisie as a whole escape from possible catastrophe. At the same time the Roosevelt administration began to draw the trade unions into the embrace of the state.

Although Roosevelt succeeded in securing a new political equilibrium, economic stability eluded him. Unemployment continued on an unprecedented scale. Relief was a bare pittance; wages were far below the accustomed standards; the agricultural crisis was only slightly mitigated; the memory of 1929 profits irritated Big Business.

Roosevelt could not prevent the struggle between monopoly capital and the industrial proletariat from unfolding. No sooner had capitalist economy started to revolve at a faster rate after 1933, than its principal driving force, the proletariat, began to move on its own account. The invigoration of the AFL and the formation of new industrial unions in the CIO were the chief organizational expressions of the growing power of the American labor movement.

The most accurate index of the struggle between capital and labor under the New Deal is the table of strike statistics. This struggle reached its peak during 1937, when there were 4,740 strikes embracing 1,860,621 individuals, almost 20 per cent of the organized workers. This was the greatest strike wave in American history. 1937 also witnessed the big sit-down strikes, in which the revolutionary spirit and potentialities of the American workers flashed forth.

This feverish activity in the ranks of the working class was accompanied by constant ferment amongst the petty bourgeoisie. During the first part of the New Deal this ferment expressed itself in a series of reform crusades. Technocracy, the Utopian movement, the Epic plan of Upton Sinclair, the Townsend Old Age Pension Plan, and a half dozen others like them, enjoyed a brief hour in the sun and then passed into oblivion. To the extreme right, more reactionary and outright fascist currents began to take shape. Huey Long, Coughlin, Pelley and his Silver Shirts bid for leadership of the exasperated petty bourgeois in competition with the Ku Klux Klan, the Black Legion, and Mayor Hague. As in Italy and Germany, these groups found financial support in the Big Business interests who most openly resented the New Deal.

This unceasing political effervescence of the petty bourgeoisie during the most favorable phase of the New Deal, as well as the militant actions of the proletariat, was evidence that Roosevelt’s reforms had succeeded in solving none of the basic problems of American society.

Nevertheless, owing to the upswing of the economic cycle and the absence of any serious political alternative, Roosevelt was returned to office in 1936 by a huge popular vote.
The 1937 Depression

In 1937 the industrial index which had been slowly crawling upward since 1933 took an abrupt plunge downward. The unexpected character of this reversal and the sharp rate of decline indicated that American capitalism, the giant of world capitalism, was mortally ill.

This new stage in the chronic crisis of American capitalism wrought significant changes in the policy and outlook of the most advanced sections of the various classes. To the monopolists it indicated that the breathing spell granted by the New Deal reforms was coming to a close. The White House became increasingly aware of the bankruptcy of its reform measures. At the same time it became more and more evident that Hitler, the Mikado, and Mussolini were preparing to throw down the gauntlet to American, French and British imperialism. This conjuncture of domestic and foreign developments dictated a reorientation in the activities and outlook of the Roosevelt administration.

What had hitherto been kept in the background of the New Deal now came forward rapidly. Emphasis upon domestic reform was supplanted by concentration on foreign policy. The major domestic developments, the tendency of labor to assume an independent political role, sketched in the formation of Labor’s Non-Partisan League and the American Labor Party, the spread of despair and fascist sentiments among middle-class elements, the slackening of heavy industry, called for a foreign diversion. These internal needs coincided with the external need to meet the challenge of German and Japanese imperialism on the world arena. The turning point came with Roosevelt’s famous speech in Chicago, October 5, 1937, calling for “quarantine of the aggressors.”

The 1937 depression was halted and reversed, not by any normal upswing of the economic cycle, but by the speeding up of war preparations not only in this country but throughout the world. Step by step, the superstructure of administrative agencies created from 1933 to 1937 was adapted to suit the needs of the war program. The concessions to the masses (CCC, WPA, FSA, NYA) were curtailed or abolished, while the departments ministering to Big Business (RFC, Export-Import Bank, etc.), were enormously expanded. Thus the main agencies of capitalist recovery in the first phase of Rooseveltism were revamped into means of mobilizing the national resources for the impending war. The New Deal’s huge public works at Tennessee Valley, Boulder Dam, and Grand Coulee, which were originally depicted as providing cheap electricity to the masses and water for municipal and farm use, ended up as indispensable adjuncts of war industry.

The administration likewise endeavored to convert the workers’ organizations into instruments for mobilizing labor for the war and to yoke it to the state apparatus. Thus the reform measures of the regime in its initial phase began to reveal their reactionary imperialist content.
The immediate effect of war preparations was to intensify the struggle between capital and labor. The expansion of war industry lessened unemployment and increased the confidence of the workers and the bargaining power of the trade unions. The spurt in corporation profits convinced the masses of greater possibilities of securing increased wages. Hence from 1937 to the outbreak of the Second World War the trade unions were able to strengthen their economic positions.

This situation was sharply reversed the minute war broke out. The administration forced the union leadership to abandon the right to strike, imposed longer hours and lower hourly wages, and launched an assault on overtime pay. Whereas under fascism the monopolists wiped out social reforms and democratic rights, and annihilated the labor organizations, the imperialist democrats, obliged to accommodate themselves for a time to the existence of the trade unions, set out to transform them into obedient appendages of the capitalist state apparatus. This program of taming the trade unions is in war and peace the typical feature of the policy of imperialist democracy toward organized labor.

Fruits of the New Deal

The Roosevelt regime started out with the slogans of reform at home and the Good Neighbor policy abroad. But Rooseelt’s road ultimately coincided with that of Woodrow Wilson—and Adolph Hitler. As Trotsky wrote in 1939: “The New Deal policy with its fictitious achievements and its very real increase in the national debt is unavoidably bound to culminate in ferocious capitalist reaction and a devastating explosion of imperialism. In other words, it is directed into the same channels as the policy of fascism.” Not his earlier reforms but the imminence of war gave Roosevelt a third term.

The war marked a breaking point in American history and in the course of the Roosevelt regime. It has modified all, and reversed many, of the pre-war political trends. It immediately smothered the smoldering class struggle under the official blanket of “national unity.” The outright fascist movements crept into their crevices almost overnight; their chief financial sources dried up as the monopolists dipped into profits exceeding those of the First World War. With the industrial index shooting to unprecedented heights, the urgent political need for fascist brutality died down. The trade unions were shackled, their leaders more openly converted into agents of Administration policies, the rank and file threatened from all sides. The draft cut wide swathes among the most vigorous and militant trade unionists. Millions of youths and women unacquainted with trade unionism were swept into the expanding war industries. While the trade unions grew in size and number, their direct bargaining power and political influence were cut down. Strikes dwindled toward zero.

On the other hand, the strengthening of the state apparatus and its executive head was enormously accelerated by the war. Roosevelt’s personal power rose with the industrial index and the expansion of the battlefields. He was now no longer simply Mr. President but Commander-in-Chief of the armed forces. Decree law—the method of Bonapartistic rule—has been extended to all spheres.

This enhancement of the power of the state apparatus at the expense of the people, and—to an incomparably lesser degree—of the plutocracy itself, has characterized all phases of Roosevelt’s administration. It is an index of the collectivism tendencies of modern industrialized economy and of the permanent crisis of American capitalism.

The war has given fresh impetus to all the basic tendencies of monopoly capitalist economy. The concentration of industry and centralization of capital in Big Business hands proceeds apace while the middle classes, shaken by more than a decade of insecurity, are being ruined wholesale.

Here is the testimony of Senator James E. Murray, chairman of the Senate Committee on Small Business in the New York Times for January 26:

“Whereas there were 170,000 small plants in the United States in 1939, producing 70 per cent of all the manufactured goods that went into the trade of the country, while 100 big corporations produced the remaining 30 per cent, the 100 big corporations are now handling over 70 per cent, while a meager 10 per cent is accounted for by those of the 170,000 smaller plants which survived the economic hurricane of the past two Years.”

The Senator adds:

“If this spectacle of concentration continues, if eight of the 100 big firms are allowed to hog 31 per cent of the war contracts, tens of thousands of the smaller concerns will vanish. Bankruptcy will surely invade once prosperous small communities, ghost towns will rise all over America, and whole areas will become as effectively devastated as if by Hitler’s barbarian legions.”

The small merchants, the petty proprietors in the cities and on die farms, the civil servants, the professionals, feel the pinch of impoverishment through rising prices, soaring taxes, stringent rationing, etc. Marx’s prediction that the middle classes must decay and disintegrate as capitalism develops, ridiculed by the bourgeois economists, has become a terrible reality in the mightiest stronghold of world capitalism.

Pearl Harbor became the signal for the monopoly capitalists to cast aside all restraint in the scramble for profits, to brush aside everything in their drive to extend the stranglehold of monopoly. With government aid they are gathering the bulk of the national resources under their control. The government has already built more than twelve billion dollars worth of new plants for the big corporations, guaranteed their profits for the duration of the war.

At the same time the problems of monopoly capitalism and its government are heaping up and, becoming intensified. The accumulated wealth of the past decades and the resources of generations to come have already been thrown into the struggle for world domination. In such a conflict there can be no real victors. Revolutionary developments, impending in all parts of the globe, present a mortal menace to American imperialism.

At home there loom economic, financial and political crises of hitherto unknown proportions. “Winning the peace” confronts monopoly capitalism with as many problems as engagement in the war. Where will jobs be found for the millions in the armed forces and the tens of millions from the war-expanded industries in a devastated world?

In the face of these real perspectives and present problems, the preoccupation of the powers-that-be with their profits, their day-dreams of world conquest, their vision of a world police system bear the features of delirium.

Regardless of the outcome of this war and the date of its conclusion, the Roosevelt regime is laying the basis for a revival of the class struggle in the United States on an incomparably broader scale and in a far more developed form. Al. though Roosevelt succeeded in postponing the final showdown between the contending classes for a time, he settled none of the burning issues of the class struggle. These are returning for reconsideration. A ruthless, greedy, domineering plutocracy, a ruined, pauperized, discontented middle class, a well-organized and politically awakening proletariat are, each in their own way, preparing for new battles.

All the political and economic processes in the country are converging toward the new arena. Hordes of rural youth are being thrown into the melting pot of the armed forces with millions of city trade unionists. The Negroes, most oppressed section of the population, are gaining new self-confidence and determination to fight for their rights. Fifteen million women have already been torn out of their households and placed at the point of production where they can see with their own eyes the value and necessity of labor organization. Millions of youth have been sucked into the vortex of the war.

Finally, the working class is becoming politically educated at a rapid rate. The concentration of all authority in Washington is teaching the workers the limits of pure-and-simple trade unionism and the necessity for combined independent political organization and action. The class strugg1es under Roosevelt from 1934 to 1941, interrupted by the war, were no more than a rehearsal for greater battles to come.

The Real Results of Roosevelt’s Rule

Roosevelt’s regime will go down in history as the regime of most grandiloquent pretensions and most abysmal failures. During his first campaign in 1932 Roosevelt promised to balance the budget if elected president. On June 30, 1932, the Federal debt amounted to a little more than $19 billions. By January 1943 Congress was preparing to raise the legal debt limit to $220 billions—and this astronomic sum represented merely the beginning of war expenditures.

Roosevelt promised to cut down the number of government employees. Today the state apparatus numbers over three millions without counting the ten millions or more in the armed forces.

Roosevelt promised peace. The United States is now involved in the greatest of wars.

Roosevelt promised prosperity. After a decade of fluctuating insecurity for the masses, today with production going full blast, the American living standards are being reduced to “bedrock.”

In 1932 Roosevelt declared that his administration would “drive the money changers out of the temple.” In 1942-43 Big Business and banking play the leading role in war production and finance in Washington as well as in the economy. Roosevelt was going to curb the monopolies. Instead, the anti-trust laws are being set aside and government suits against the big corporations over cartel agreements with foreign trusts have been suspended. Never has the power of monopoly in American life been greater than today. Never has that power been exercised more nakedly, brazenly and ruthlessly.

Roosevelt promised to save the middle classes. They are being destroyed.

Roosevelt was elected as a friend of the Negro people. They suffer discrimination in the country and in the armed forces as before. His administration did not even pass anti-lynch legislation or abolish the poll tax.

Roosevelt posed as the friend of labor. Today the unions have been deprived of their strike weapon, wages have been fixed, while prices and taxes soar.

Roosevelt promised to make liberalism prevail; today the reactionaries in his own party are dictating official policies.

Roosevelt promised to ameliorate class bitterness and curb the class struggle. His administration is preparing the ground for an explosive outbreak of class struggle.
Such are the real results of the past decade of Democratic Party rule. Roosevelt’s New Deal has turned out to be the same grim fiction as Wilson’s “New Freedom.” The war has disclosed the true character of Roosevelt’s regime as a political instrument of monopoly capitalism.

The historical significance of the New Deal consists in the fact that it has demonstrated the inability of even the strongest section of world capitalism to solve the problems of present-day society. The experiment of reforming American capitalism has been tried on a gigantic scale and found wanting. Out of the New Deal’s debacle, new roads open out before the American people, requiring new methods, new leadership, new forms of political organization. These are being shaped in the crucible of the war which has crowned ten years of Roosevelt’s rule.